Singapore has announced it is making a push to promote the adoption of electric vehicles (EV) beginning from next year, as it makes the move towards phasing out the sale of internal combustion engine (ICE) vehicles by 2040.

New measures to make EVs a more attractive proposition were announced by the country’s deputy prime minister Heng Swee Keat in his Budget speech earlier today. This includes expanding the EV charging infrastructure in the republic from 1,600 points presently to 28,000 island-wise by 2030. It will also include an early-adoption incentive scheme for EVs, which will be in place from 2021 to 2023.

“We are placing a significant bet on EVs, and leaning policy in that direction because it is the most promising technology. Our vision is to phase out ICE vehicles and have all vehicles run on cleaner energy by 2040,” he said.

The country already has a Vehicular Emissions Scheme (VES) in place. Introduced in 2018 and valid till December 31 this year, this provides an upfront rebate of up to S$20,000 (RM59,700) for the cleanest, low-emission vehicles.

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Electric vehicles are also set to benefit from an EV early adoption incentive scheme, which will see a rebate of 45% off the vehicle’s additional registration fee (ARF), capped at S$20,000 (RM59,700). This will be in place from January 1, 2021 to December 31, 2023.

According to the country’s Land Transport Authority (LTA), the new scheme – which is expected to cost the government an estimated S$71 million (RM212 million) over the next three years – will lower the upfront cost of an electric car by an average of 11%, and also narrow the upfront cost gap between electric and ICE cars.

A Commercial Vehicle Emissions Scheme for light goods vehicles, similar to VES – which is applicable for cars and taxis – will also be introduced, with details of that plan expected to be announced in the next few weeks.

The government is also set to revise the method of calculating road tax for EVs. which is tiered by power rating, from January 2021. According to the LTA, this will lead to an across-the-board reduction in this variable component of road tax for EVs and some hybrids.

However, a lump-sum tax will be imposed For EVs to offset the loss of fuel excise duties, which yields the government a significant revenue of around S$1 billion (RM2.99 billion) a year. This additional tax on EVs will be phased in over three years, beginning next January at a rate of S$200 (RM597), then S$400 (RM1,193) in 2022 and S$700 (RM2,088) from 2023 onwards.

“Ideally, we would like to implement a usage-based tax on EVs as an alternative to fuel excise duties. But the technology to do this properly on EVs is the next generation ERP (electronic road pricing) system, and distance-based charging using ERP is still several years away,” Heng said.

“Total road tax, after the revision in methodology and the new lump-sum tax, will be higher for some EV models. However, EV buyers can expect to enjoy substantial cost savings because of the significant EV early adoption incentive,” he explained. The LTA says that under the revised road tax framework, mass market EVs will incur an annual usage cost which will still be about 9% lower than their ICE equivalents.

Malaysia is set to unveil its National Automotive Policy (NAP) 2020 this Friday, February 21. Will we see a similar line of thought towards electrification in our revised policy?